The Value of an Oscar

(January 21, 2013 edit: For a more recent update on the numbers, see this article.)

In the race for the 1998 Best Picture Academy Award, $15 Million was spent to promote Shakespeare in Love - and it was catapulted to victory against Saving Private Ryan, Life is Beautiful, The Thin Red Line, and Elizabeth. Since then, the advertising gauntlet has been thrown down, and the Oscar race has been infused with hundreds of millions in advertising, with an estimated $10-15 Million spent per film with multiple nominees. But is it worth the cost? How much is an Academy Award actually worth?

To answer the question, I’ll first breakdown the differences between Oscar winners, nominees, and the average film. Oscar contenders are, by their nature, the cream of the film crop, and that’s reflected in their numbers. While the average film released in the US from 2000-2009 made roughly $19M domestically, the average film with at least one Oscar nomination made $73M, the average film with a Best Picture nomination made $109M, and the average Best Picture winner made $143M. Below are the different results by number of Academy Award nominations and Academy Award wins.

I continued this analysis by studying the box office returns based on the type of award:

But it isn’t fair to conclude an Oscar is worth any of these amounts. A Beautiful Mind passed the $150M mark before it took Best Picture of 2001. Spiderman II grossed all of its domestic $374M before Oscars were even announced. The Oscar, in these cases, was more a reflection of successful films than the cause. To see this, I’ve taken every film nominated for an Academy Award, separated them based on whether they received a win or not, and overlaid their weekly box office returns based on the time of that year’s award ceremony.

Here we can see a few things about Oscar-nominated films. The most obvious lesson from the chart is that almost all revenues of Oscar-nominated films comes before the awards ceremonies, which isn’t altogether surprising. But what’s much more interesting is the difference between award-winners and nominee-only films on the right half. While they’re roughly equivalent on the left, the right side is completely dominated by Oscar Winners, which is our first indication that Oscar wins are actually valuable in themselves.

To further that analysis, I wanted to find out the real value of the “Oscar bump,” or just how much more money an Oscar-winning film makes after the ceremonies, compared to a film receiving a nomination-only. I could just report the average difference between winners and nominees-only; but that would still be misleading. Oscar winners tend to make more money than nominees-only before the awards, so it would be normal to expect the winners to continue to make more afterwards (even if there were no value added from the award itself). So to factor out this effect: I have calculated that expected box office result – as if the winners and nominees-only continued to earn the same proportional returns – and then found the difference between the actual box office revenue and the expected revenue. That difference is the “bump.” It represents how much films truly gain in the domestic market thanks to the Oscar brand itself. I also expanded the data back to 1990 for this analysis, for more accuracy. I’ll let the results speak for themselves:

Notes: All data are from Box Office Mojo. The Visual Effects, Makeup, Documentary Feature, and Cinematography categories were not reported in the final chart because on the winners and nominee-only films in these categories had been released on significantly different timelines, which would bias results. Other Oscar categories not reported because of lack of data in US domestic box office.